Americans don’t know anything about interest rates and portfolios
- Joshua M Brown
- August 21st, 2013
Shocking but not shocking survey sponsored by Edward Jones asks Americans about the impact of interest rates on their investments and retirement portfolios:
According to a recent survey by financial services firm Edward Jones, 63 percent of Americans don’t know how rising interest rates will impact investment portfolios such as 401(k)s, IRAs and other savings platforms. In fact, a full 24 percent say they feel completely in the dark about the potential effects.
The survey of 1,008 Americans conducted by ORC International, gauged how well they understood the impact potential rising interest rates would have on investment portfolios.
Age and Awareness
One-third of respondents between the ages of 18 and 34 replied they have “no idea” how interest rate changes will impact a portfolio. As respondents’ age increased, their level of awareness increased as well with the exception of the oldest age group. One-quarter of those 65 and older also indicated they had “no idea.”
Men and women are evenly matched when it comes to respondents who, while understanding there will be some impact to portfolios, do not quite understand the specifics (40 percent and 39 percent, respectively). A division occurs among respondents who admit they “do not understand at all” what those impacts may be. While 29 percent of women admitted they do not understand the issue, just 19 percent of their male counterparts did.
Respondents in the lowest income bracket were most likely to misunderstand the impact of rising rates, with 35 percent of Americans surveyed identifying as such. Just 13 percent of those with household incomes of $100,000 or more indicated the same.
They’re learning the hard way right now, it would appear. Just wait until those quarterly statements arrive and detail the losses of their “safe” bond funds.
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The Reformed Broker is a blog about financial markets and the economy. Joshua Brown is a New York City-based investment advisor for high net worth individuals, charitable foundations, retirement plans and corporations... More.